CHAPTER 1

An Introduction to Cost-Benefit Analysis

The very need to weigh benefits against costs-the essence of economics-is evaded by the irresponsible exercise of arrogance.

—Thomas Sowell

Chapter 1 Preview

When you have completed reading this chapter you will:

see this book as a practical guide for decision-makers charged either with performing or interpreting basic cost-benefit analysis (CBA);

be aware of project proposals for which CBA is and is not an appropriate decision tool;

know why government project assessment requires different tools than private project assessment;

realize that objective decision making is based on considering foregone options, minimizing costs, and using scarce resources to produce what residents need ...

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